The Draft Code Of The Republic Of Kazakhstan ‘On Subsoil And Subsoil Use' As Of August 2017: Key Aspects

The Draft Code of the Republic of Kazakhstan 'On Subsoil and Subsoil Use' ('the Draft Code'), presented in August 2017, introduces significant changes to the current subsoil use legislation in Kazakhstan. The aim is to increase the investment attractiveness of the region and to simplify the permit procedures for undertaking subsoil use operations.

In addition to legal amendments covered by our publication on the draft Code as of December 20161, the present update highlights the following key developments of the Draft Code:

Individual regulatory regime for each type of mineral, including uranium, hydrocarbons and solid minerals; Open access to geological data; Introduction of CRIRSCO mineral reserves international reporting standards system; Transformation of subsoil use blocks under the contract through expansion, reduction, spin-off and accession depending on the type of minerals; New grounds for early unilateral termination of subsoil use contract by the competent body. The Draft Code sets an individual regulatory regime for each type of mineral: hydrocarbons, solid minerals and uranium. The subsoil use right for exploration and production of hydrocarbons is granted on the basis of auction as well as direct negotiations. For uranium this is based on direct negotiations, and for solid minerals – separate exploration and production licenses.

Another significant change in the subsoil use area is the granting of open access to geological data, except for temporarily confidential data or data related to state secrets. Leading powers' experience demonstrates that the investor faces less geological risks and, hence, finds the subsoil more attractive to invest in if the state provides more qualitative geological data to the investors. The Draft Code provides access to information on subsoil use licenses and contracts by means of accessing the basic information on subsoil users and operations that is publicly available on special Internet resources.

The Draft Code envisages the implementation of the CRIRSCO international system of mineral reserves reporting standards. On 14 June 2016, Kazakhstan became a member of the Committee for Mineral Reserves International Reporting Standards via the KAZRC Association (Kazakhstan Association for Public Reporting of Exploration Results, Mineral Resources and Mineral Reserves). The CRIRSCO reporting codes are designed to maintain uniform reporting terminology when mining companies disclose any mineral reserves...